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2021 (10) TMI 269 - AT - Income TaxValidity of reopening of assessment u/s 147 - tangible material to prove the income escapement of income found or not? - Exercise for ascertaining the unsecured loans accepted during the year - Assessee submitted before the ld. CIT(A) that the notice u/sec. 148 was issued in the case of the Assessee on suspicion and there was no material to believe that the income had escaped from assessment - outstanding unsecured loans in the balance sheet and the AO suspected the entire outstanding of unsecured loans on the basis of admission given by the assessee for earlier years i.e. 2009-10 to 2015-16 - HELD THAT:- In the wording for reopening the assessment the AO used the words that unsecured loans appears to be suspicious and disproportionate to the turnover/gross receipts of the Assessee. Assessee reported the turnover of ₹ 290 crores and excess of income over expenditure was ₹ 5.30 cores. How the AO landed in a conclusion that 23.40 crores unsecured loans were suspicious and disproportionate to the turnover was not mentioned. As in reasons, the AO held that outstanding unsecured loans of ₹ 23.40 crores was believed to be escapement of income chargeable to income tax, whereas in the assessment order the AO found that unsecured loans accepted during the year was only ₹ 9,14,37,645/-. Thus, the AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. AO has not even made minimum exercise for ascertaining the unsecured loans accepted during the year, under consideration before reopening of the assessment. Without even ascertaining the unsecured loans accepted during the year in the reasons recorded, the AO viewed that the entire sum of ₹ 23.40 crores outstanding as per the balance sheet was suspicious and escaped from the assessment chargeable to tax. Thus, the above facts clearly show that the AO reopened the assessment only with a suspicion without having sufficient reasons to form the belief for escapement of income - CIT(A) has rightly quashed the notice Unsecured loans outstanding in year under consideration need not be suspected merely because the assessee had admitted the same as income in the earlier years. For Income tax purpose each year is independent and the issue has to be decided on facts independently. From the above, it is very clear that the AO reopened assessment merely on suspicion - Decided in favour of assessee.
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